AI Overview...
- Bank Cannot Declare Borrower NPA if Making Regular Payments
- Main Points & Insights:
- Several court rulings clarify that a borrower making regular payments cannot be declared NPA. For example, in Amar Alloys Pvt Limited (Regd) VS State Bank Of India - Punjab and Haryana, the court noted that even if an account was declared NPA, subsequent regular payments could support the borrower’s case. Similarly, Dhanya and Co. VS Andhra Bank - Telangana emphasized that non-renewal of credit, not regular payments, led to NPA classification, and the borrower in question was making regular payments.
- The RBI Circulars and Master Circulars (e.g., ELAVAKKATTU CERAMICS VS AUTHORIZED OFFICER, (UNDER SECURITIZATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT) STANDARD CHARTERED BANK, HDFC BUILDING - Kerala, Mohan Motor Business Private Limited VS ICICI Bank Limited - Calcutta) highlight that account classification as NPA should be based on default or overdue status, not on regular payments. Natural justice principles also necessitate giving borrowers an opportunity to be heard before declaring NPA (Akhouri Gopal S/o Late Akhouri Banshidhar VS State of Bihar - Patna).
- The law restricts the borrower’s ability to challenge asset classification directly; their recourse is generally through invoking the appropriate legal remedies or jurisdictional provisions, not by mere objections to notices (Sravan Dall Mill P. Limited, Rep. by its Managing Director VS Central Bank of India, Rep. by its Chief Manager, Corporate Finance Branch, Hyderabad - Andhra Pradesh).
- Courts have held that if a borrower is making timely EMIs and fulfilling contractual obligations, the account should be considered regularized and not NPA (ELAVAKKATTU CERAMICS VS AUTHORIZED OFFICER, (UNDER SECURITIZATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT) STANDARD CHARTERED BANK, HDFC BUILDING - Kerala).
- Analysis & Conclusion:
- The prevailing legal and regulatory framework, supported by judicial pronouncements, makes it clear that a borrower who is making regular payments cannot be declared NPA. Such classification requires overdue or defaulted payments, and declaring NPA without evidence of default violates principles of natural justice and the RBI guidelines.
- Banks must adhere to these principles and cannot arbitrarily classify accounts as NPA when borrowers are compliant with repayment obligations.
Search Results for "Bank Cannot Declare any Borrower Npa if he is Making Regular Payments"
2019 0 Supreme(P&H) 1395 • India - Punjab and Haryana
AJAY KUMAR MITTAL, MANJARI NEHRU KAUL
informed the borrower that its account has been declared as NPA by the Statutory auditor and was directed to deposit the entire ... in the Master Circular dated 01.07.2015 issued by the Reserve Bank of India in exercise of powers under the 1949 Act and declare ... proof is required to be given to the borrower to support his claim. ... It also cannot be disputed that even assuming that particular had become NPA, the subsequent payments by the #HL_STAR....
2021 0 Supreme(Cal) 29 • India - Calcutta
SABYASACHI BHATTACHARYYA
There is no substantial basis for the challenge in the present writ petitions to the classification of the loan account as NPA ... was well within its authority to declare the account as NPA. ... Hence, let alone making out any exceptional case of arbitrariness, miscarriage of justice or violation of any Fundamental Right or principle of Natural Justice, the actions taken by the Bank, from classifying the loan account as NPA to taking measures under Sections 13(2) and....
2020 0 Supreme(Telangana) 747 • India - Telangana
A.RAJASEKHAR REDDY, T.VINOD KUMAR
The petitioner argued that despite regular payments, the bank declared the account as NPA and issued demand and possession notices ... court also emphasized the legal principles under the SARFAESI Act and Rules, 2002, regarding the classification of accounts as NPA ... The court also concluded that the petitioner's account was rightly classified as NPA due to non-renewal of the credit facility within ... Since, the petitioner was regular in #HL_START....
2014 0 Supreme(Mad) 1021 • India - Madras
T.RAJA
Chandrasekar and the need for bank officers to act with honesty, integrity, and diligence. ... The punishment was confirmed by the General Manager and the Executive Director of the Indian Bank. ... Punishment - Compulsory Retirement - Indian Bank Officer Employee's (Discipline & Appeal) Regulations, 1976 - Regulation 4(h) ... The Board shall be entitled to declare the amount of loss or damage so resulting and their declaration in that behalf shall be final and conclusive and the amount so declared shall....
2009 0 Supreme(AP) 627 • India - Andhra Pradesh
GHULAM MOHAMMED, VILAS V.AFZULPURKAR
cannot agitate regarding asset classification—Borrower has only remedy to invoke extra ordinary jurisdiction of High Court under ... as non-performing asset—Mere rejection of objections of borrower to creditors notice u/s.13 (2) would not give rise to cause of ... jurisdiction of DRT u/s.17 unless measures u/s.13 (4) are taken by creditor—In absence of invocation of provisions of Section 13(4), a borrower ... It also cannot be disputed that even assuming that particular had become NPA,....
2019 0 Supreme(Pat) 797 • India - Patna
RAJEEV RANJAN PRASAD
of natural justice – Principles of natural justice is like a brooding omnipresence which prevails everywhere but the principle cannot ... submit his objection to affidavit limited to factual aspects stated in affidavit – Giving an opportunity to person in possession or borrower ... Magistrate shall in consonance with principles of natural justice be obliged to give opportunity to person in possession of asset or borrower ... The Bank has relied upon the relevant provisions of the RBI Circular which permits the ....
2014 0 Supreme(Ker) 764 • India - Kerala
P.R.RAMACHANDRA MENON
It is ordered accordingly, making it clear that, it will be for the petitioners to effect the regular EMIs without fail. ... Net result is that there cannot be any 'overdue' amount in the loan account and the loan account of the petitioner has to be declared as 'regularized', taking it outside the purview of 'NPA' status. ... Though the course and conduct of the respondents cannot, but be deprecated; this Court reluctantly refrains from awarding cost. ... R1 (a) circ....
2025 0 Supreme(Ker) 1838 • India - IN THE HIGH COURT OF KERALA AT ERNAKULAM
MURALEE KRISHNA S., ANIL K.NARENDRAN
(xi) To declare that the guidelines and notifications issued by the Reserve Bank of India from time to time empowering the bank and financial institutions to declare a borrower as a willful defaulter is without authority of law, for such a declaration amounts to a civil death and further ... Under the Reserve Bank of India notifications/master circulars, once one account of the borrower becomes NPA, automatically all other accounts relating to such borrower, guarantor....
2014 0 Supreme(Guj) 819 • India - Gujarat
AKIL KURESHI, J.B.PARDIWALA
However, these observations will not apply to promoters/ entrepreneurs –Merely because company is carrying on banking business, it cannot ... Master Circular, so far as it is sought to be made applicable to all directors of company, is arbitrary and unreasonable –Court declare ... as willful defaulters in terms of the Reserve Bank of Indias Master Circular – Held, Reserve Bank of India was within its powers ... Despite regular reminders from the bank for payment of the dues, no steps w....
2010 0 Supreme(Chh) 202 • India - Chhattisgarh
SATISH K.AGNIHOTRI
on loan payments, and the compliance with statutory provisions. ... Finding of the Court: The Court found that the Petitioner had defaulted on loan payments and that the bank's actions ... timely payment and had breached the loan agreement. ... It states that different fees may be prescribed for making the application by the borrower and the person other than the borrower. ... borrower (vide Section 17(3) of NPA Act). ... However, on account of res....
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